Calcutta, Oct. 20: Indian Oil (IOC) is set to take over the entire holding of Balmer Lawrie in Avi-Oil India, the only domestic producer of aviation lubricant.
Balmer Lawrie, the diversified public sector company, has already started negotiations with Indian Oil to arrive at a deal.
Confirming the development, a senior executive in Balmer Lawrie said the company is no longer interested in the venture because aviation lubricant is not its core area.
“The dialogue is on with Indian Oil and we are waiting for the best commercial deal,” he said.
Sources, however, said Balmer Lawrie is divesting its stake in Avi-Oil in view of the government’s decision to sell off its stake in the Calcutta based company.
Balmer Lawrie and Indian Oil have 25 per cent each in Avi-Oil while the French multinational NYCO S.A. holds 50 per cent.
The joint venture was formed in 1993 in order to capture the aviation and defence sectors in the country which spend a sizeable amount on importing the products.
“Our plant in Haryana has been commissioned in 1999 and now it is operating in full swing. We have already started negotiations with the domestic airlines as well as companies in the power sector besides defence. Since our price is comparatively cheaper than the imported products, we expect to make a strong turnover in the next few years,” a senior Avi-Oil executive said.
NYCO provides the technical know-how to the company for a wide range of products for aircraft, military and industrial equipment.
The company has also set up a modern state-of-the-art laboratory testing facility to provide technical support to the customers.
“The technical support is something that has won many good customers for us as the imported products are not backed by any support system,” the executive said.
With Balmer Lawrie exiting, the company will become a 50:50 joint venture between NYCO and IOC.
Avi-Oil currently produces 1450 tonnes of aviation lubricant per annum. The company plans to double the production capacity soon.